Accounting for by-product, The Bishop's Falls Lumber Corporation harvests lumber and prepares itfor sale to wholesalers of lumber and wood products. The main product is finished lumber, which issold to wholesale construction suppliers. A byproduct of the process is wood pellets, which are soldto wholesalers of wood pellet stoves. During December 2013, the manufacturing process incurred$664,000 in total costs; 160,000 board feet of lumber were produced and sold along with 40,000pounds of pellets. The finished lumber sold for $10 per board foot and the pellets sold for $4 per100-pound bag. There were no beginning or ending inventories.a. Compute the December 2013 gross margin for Bishop's Falls Lumber Corporation assuming thatby-product revenues reduce joint production costs.b. How would your answer change if by-products are accounted for as revenue when sold?

Answered: Accounting for by-product, The Bishop's…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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